Generics Yield Increased Savings for Patients

Kathleen Jaeger, GPhA President and Chief Executive Officer

Published Online: Wednesday, April 1, 2009

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It has only been a couple of months
since the generic pharmaceutical
industry kicked off its yearlong
celebration of the 25th Anniversary
of the enactment of the Drug Price
Competition and Patent Term Restoration
Act of 1984 (Hatch-Waxman
Act), which created the modern US
generic pharmaceutical industry.

In January, the Harris Poll published
the results of a survey that
found that 81% of respondents indicated
that they would choose a generic
over a brand name drug. This compares
with just 68% in 2002. The poll
also found that 40% of respondents
said they would “always choose to buy
generic drugs over brand name,” a 17%
increase since 2006. Conversely, only
4% of respondents said they “would
always choose to buy brand name prescription
drugs over generics.”

Also during January, the results of
the “National Health Spending in 2007”
report was published that demonstrated
growth in US health care spending
in 2007 was at its slowest rate since
1998. The 4.9% increase in retail prescription
drug spending, the slowest
growth rate since 1963, was in part
the result of “a further increase in the
generic dispensing rate.” In addition,
the report found that prescription drug
prices grew at only 1.4% in 2007, “driven
in part by increased use of generics
and the introduction of generic drug
discount programs by large retail chain
stores.”

As America ended 2008, generics
were being dispensed for approximately
69% of all prescriptions but
accounted for only 16 cents of every
dollar spent on prescription medicines.
For 25 years, generic medicines
have been saving patients and
the government billions of dollars a
year.

2009—The Year of Biogenerics?

With the contribution of generic pharmaceuticals
to affordable health care
so evident, it is possible that the 25th
Anniversary of Hatch-Waxman could
see the floodgates open to even more
significant patient savings, namely
through the approval of a sciencebased
pathway for biogenerics.

During the GPhA Annual Meeting,
held in February, Rep Henry Waxman
(D, CA) noted in a special message to
our industry that, “Biologics are one of
the fastest growing and most expensive
categories of drugs, frequently costing
tens of thousands, even hundreds of
thousands of dollars per year. These
drugs are often life-saving but when
we originally enacted our law 25 plus
years ago, biologics were essentially
nonexistent, so we didn’t explicitly
cover them under the law. A workable
scientific regulatory and legal pathway
for biogenerics will ensure more
affordable medications for Americans,
and we believe it will spur the innovation
in the biotech markets. I intend to
use my position as chairman (of the
Energy and Commerce Committee) to
improve the health and well-being of
this nation. I know that a critical piece
of achieving that goal is to bring generic
competition to the biotech drug
market. The ballooning costs of these
drugs are unsustainable, and I want to
work with the president, my committee,
all my colleagues in Congress, and
the full array of stakeholders to get
this job done.”

On March 11, Rep Waxman made
good on that promise, introducing
HR 1427, the Bipartisan Biogenerics
Consensus Bill: “Promoting Innovation
and Access to Life-Saving Medicine
Act,” with Reps Nathan Deal (R, GA),
Frank Pallone (D, NJ), and Jo Ann
Emerson (R, MO). This bipartisan,
consensus bill achieves the balance of
fostering pharmaceutical innovation
while also making affordable medicines
available to patients.

Consumer, business, and labor organizations,
and many of our nation’s
governors support legislation that
brings biogeneric medicines to patients
sooner rather than later. Over the past
2 years, members of Congress have
learned a great deal about biogenerics
and heard from the FDA that the science
exists to approve safe, effective,
and affordable biogenerics. They have
heard that the FDA scientists want the
authority and flexibility to determine
how to best ensure safety and efficacy.
In addition, they have heard that significant
cost savings will result from
bringing biogenerics to patients.

Studies continue to show that creating
a workable biogenerics approval
pathway will not only bring life-saving
medicines to patients in need, it also
will save our health care system billions
of dollars.

Hatch-Waxman has clearly demonstrated
that we can achieve the much
needed balance between pharmaceutical
competition and innovation for
the benefit of patients, payers, and
state and federal governments. We
have done it before with generics, and
we can do it again with biogenerics.
Although there will be much debate
as legislation moves forward, we are
hopeful that biogeneric legislation will
provide the capstone to our celebration
of 25 years of more affordable
medicines for consumers.